When Australian house builder Porter Davis went into liquidation in March 2023, it left more than 1,700 people with half-finished homes and made insurers even more selective in their appetite for construction risk.

Factors like fixed-price construction contracts, an inflationary squeeze on costs and the availability of materials and labour have added significant pressure on the industry. Porter Davis is among more than 2,500 construction companies that have folded in Australia since mid-2021, according to data from the Australian Securities and Investments Commission.

The industry in New Zealand is also feeling the strain, with data from Centrix showing 199 construction companies have filed for liquidation this year, a 35 per cent increase on 2022.

The ongoing hard insurance market is also contributing to the higher cost of cover like contract works insurance, which covers builders, tradies and subcontractors against accidental loss or damage to their projects during the construction period.

“The cost of claims contributes to the hardening of the market and, over the past few years, weather perils have impacted the construction industry in terms of high-level losses,” says Lesley Connolly, principal at Irecon Insurance Services, an authorised representative of Insurance Advisernet.

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